Agenda - 03-23-1993 - VIII-A - Laserfiche WebLink

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1 ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No Vlr-,q ACTION AGENDA ITEM ABSTRACT Meeting Date: March 23, 1993 SUBJECT: Refinancing of 1988 Bonds DEPARTMENT Finance PUBLIC HEARING YES NO X ATTACHMENT(S) INFORMATION CONTACT Savings Report Ken Chavious, ext 2450 Letter of Agreement with Financial TELEPHONE NUMBER Advisor Hillsborough 732-8181 Authorization for Financial Advisor Chapel Hill 968-4501 to Bid on Refinanced Bonds Mebane 227-2031 Refunding Request to LGC Durham 688-7331 Proposed LGC Refunding Schedule PURPOSE: To consider authorizing refinancing of 1989, 1990, and 1991 Series bonds approved by Orange County voters in the 1988 bond referendum. BACKGROUND: During the past year as interest rates have continued to fall, County staff have been monitoring the bond market to determine if the County should consider refinancing all or a portion of the bonds authorized for sale by voters in the November 1988 referendum. At the request of the County Finance Officer, Wachovia Bank has prepared a savings report that estimates that the County could save slightly more than $1 million by refinancing the remaining 1989, 1990, and 1991 Series bonds. The annual savings, beginning with FY1993-94, would be approximately $59,000. Estimated administrative fees of approximately $75,000, figured into the estimated cumulative savings, have been rolled into the refinancing. Accordingly, there are no upfront costs to the County if the bonds are refunded. All estimates are, of course, based on current market conditions. The Local Government Commission could sell Orange County' s refunded bonds as early as May 18. Depending on changes up or down in prevailing interest rates, the County' s cumulative savings as a result of a bond sale on May 18 could be less or more than the figures cited here. The North Carolina General Statutes permit only one refunding of an original bond issue, so a decision to pursue refunding now would reflect the County' s judgement that interest rates are unlikely to drop substantially further, and that it is prudent to try to achieve the significant savings that are now estimated. The LGC requires that an analysis of potential savings be performed by a financial advisor as part of the refunding process. Staff recommends that Wachovia Bank provide this service because of the County' s excellent experience in working with them on lease-purchasing and other financing arrangements. Wachovia would want to bid on the refunding bonds, which would not present a conflict of interest because the process is conducted by sealed, competitive bid. Securities laws do require the County to grant written authorization to the financial advisor to bid on the refunding bonds.